Weekly Update Volume 40, Issue 24

08/30/2010

LITIGATION

CWA, POINT SOURCE, NATURAL RUNOFF:

The Ninth Circuit held that stormwater runoff from logging roads that is collected by and then discharged from a system of ditches, culverts, and channels is a point source discharge for which an NPDES permit is required. Accordingly, the court reversed a lower court decision dismissing an environmental group's claim that the Oregon forestry department and several timber companies violated the CWA when they failed to obtain NPDES permits for the stormwater runoff at issue in this case. The lower court ruled that the Silvicultural Rule, 40 C.F.R. §122.27, categorically exempts all discharges from silvicultural activities resulting from natural runoff, thus removing the discharges from the NPDES permitting process. But the discharge of natural runoff becomes a point source discharge when it is channeled and controlled through a “discernible, confined and discrete conveyance” in a system of ditches, culverts, and channels, as is the case here. Moreover, the collected runoff constitutes a point source discharge of stormwater "associated with industrial activity" under the terms of CWA §502(14) and §402(p). An NPDES permit, therefore, was required.Northwest Environmental Defense Center v. Brown, No. 07-35266, 40 ELR 20221 (9th Cir. Aug. 17, 2010).

NATIONAL FOREST MANAGEMENT ACT, NEPA, SPOTTED OWL:

The Ninth Circuit reversed and vacated a lower court decision enjoining the U.S. Forest Service from certain logging activities in theDeschutes National Forest. The Forest Service sought to reduce the risk of fire and disease in a portion of the forest that was reserved for conservation and provided habitat for the northern spotted owl. As part of this project, the Service planned to thin some of the trees in the area. Although some habitat would be degraded in the short term, the Service believed this was the best option for the overall long-term health of the forest. Conservation groups filed suit under the National Forest Management Act (NFMA) and NEPA, and the lower court found in their favor. But the Forest Service complied with the NFMA. The groups failed to demonstrate that the Forest Service made a clear error of judgment in determining that the proposed treatments conformed with the applicable forest plan, or that the decision to implement its chosen alternative was arbitrary or capricious. The Forest Service's alleged admissions about possible harms to the northern spotted owl actually describe the balancing of risks that the Forest Service was required to undertake. In addition, the Forest Service adequately considered the cumulative impact of past, present, and foreseeable future actions and sufficiently considered and responded to opposing scientific views under NEPA.League of Wilderness Defenders-Blue Mountains Biodiversity Project v. Allen, No. 09-35094, 40 ELR 20224 (9th Cir. Aug. 13, 2010).

ESA, FEDERAL JURISDICTION:

The Ninth Circuit held that property owners and three employees of the California Department of Fish and Game did not violate the ESA when they dug up and removed Sebastopol meadowfoam--an endangered plant species--from privately owned wetlands. Under ESA §9(a)(2)(B), it is unlawful to remove, damage, or destroy an endangered plant species in areas under federal jurisdiction. Although the site at issue is privately owned, an environmental group alleged that the plant was found in an area under federal jurisdiction because it was found in the portion of the site that was designated as adjacent wetlands under the CWA. Therefore, the group argued that the defendants violated §9 when they removed the Sebastopol meadowfoam plants. Although the term "under federal jurisdiction" is ambiguous, the FWS has not yet promulgated regulations or offered any guidance materials specifically addressing this issue. Without any agency interpretation of the "areas under federal jurisdiction," the court proceeded to interpret the term, concluding that the term does not include all of the “waters of the United States” as defined by the CWA and its regulations. While "areas under federal jurisdiction" surely includes areas under the control of the federal government, i.e. through ownership, leasehold estates, or conservation easements, it does not encompass wetlands that are adjacent to navigable waters and therefore subject to only the regulatory jurisdiction of the U.S. Army Corps of Engineers.Northern California River Watch v. Wilcox, No. 08-15780, 40 ELR 20233 (9th Cir. Aug. 25, 2010).

ESA, THREATENED SPECIES:

The Ninth Circuit affirmed a lower court decision upholding the NMFS' decision to list the steelhead, a type of Pacific salmon, as a threatened species in California's Central Valley. In listing the steelhead, the NMFS defined it as a distinct species under the ESA, separate from rainbow trout, another type of Pacific salmon that breeds with and looks like the steelhead. The separate listing was a departure from the prior NMFS policy of classifying interbreeding Pacific salmon as a single species. Irrigation districts argued that the listing violated the ESA because steelhead and rainbow trout interbreed, and the statute therefore requires the NMFS to treat them as a single species. But interbreeding is not alone determinative of whether organisms must be classified alike under the ESA where, as here, they develop and behave differently. The districts also argued that the NMFS violated the APA by failing to explain its decision to adopt a new policy for classifying the fish, but the NMFS provided an adequate rationale for its change of policy.Modesto Irrigation District v. Gutierrez, No. 09-15214, 40 ELR 20226 (9th Cir. Aug. 20, 2010).

CERCLA, ARRANGER LIABILITY:

A district court held that a company that manufacturers a machine that recycles dirty perchloroethylene (PCE) for reuse in future dry cleaning is not liable as an arranger under CERCLA for the disposal of hazardous substances at a dry cleaning facility. The dry cleaning facility failed to demonstrate that the company took intentional steps to dispose of the waste. The company had no more than knowledge that the machine might leak, spill, dump, or otherwise discard waste water with PCE residue. Based on its installation instructions, the machine provided for waste water to be caught in a pail. Once caught in the pail, the company neither planned for nor controlled disposal of the wastewater. In addition, because the company sold a useful product that, through its normal use, produced PCE-containing water waste, the useful product defense shields the company from arranger liability. The court also dismissed the facility's nuisance and trespass claims.Team Enterprises, LLC v. Western Investment Real Estate Trust, No. 08-0872, 40 ELR 20227 (E.D. Cal. Aug. 9, 2010) (O'Neill, J.).

CERCLA, INSURANCE:

A district court held that response costs a Canadian zinc producer incurred pursuant to a settlement agreement with EPA constitute "damages" under its insurance policies. Although the remedial investigation and feasibility study (RI/FS) is not being conducted pursuant to an order from EPA, it is nonetheless being carried out consistent with CERCLA's national contingency plan. Therefore, the costs of the RI/FS are being paid as the result of action taken under CERCLA. Moreover, the EPA settlement agreement represents a compromise of a CERCLA liability property damage claim. The sums that the producer has obligated itself to pay in settlement of that claim constitute "damages" pursuant to the language of the policies. In addition, the payment of RI/FS costs represents settlement of a claim in itself rather than expenses incurred in the process of settling a claim.Teck Metals, Ltd. v. Certain Underwriters at Lloyd's, London, No. 05-411, 40 ELR 20228 (E.D. Wash. Aug. 10, 2010) (Suko, J.).

CERCLA, INSURANCE:

A district court held that under Illinois law, an insurer has a duty to defend the former owner of the South Green Plating Superfund site in Chicago, Illinois, in an underlying CERCLA case concerning the reimbursement of U.S. response costs incurred at the site. The government's underlying allegations do not state unambiguously that environmental contamination during the policy period caused injury, and the underlying complaint is far from clear about what transpired at the site. But the allegations do not foreclose the possibility that the evidence will show that the subject of the suit does fall within the insurance policy's coverage. Thus, the insurer has a duty to defend the former owner against the government's allegations.United States v. Clark, No. 08-CV-4158, 40 ELR 20230 (N.D. Ill. Aug. 19, 2010) (Gottschall, J.).

CERCLA, RESPONSE COSTS:

A district court dismissed all but one of the United States' CERCLA claims against several companies for response costs incurred at a hazardous waste site in Rialto, California. Under Federal Rule of Civil Procedure 13(a), the United States should have asserted the claims in a prior 2005 action because the claims arose from the same transaction, the United States filed or was deemed to file responsive pleadings as to the same parties, and they were opposing parties in the prior and current cases. Because it failed to do so, the United States waived its right to bring the claims against the companies in the current action. In addition, CERCLA does not provide an exception to Rule 13. Under the plain terms of CERCLA and Rule 13(a), the United States' complaint and counterclaims must be dismissed. However, the United States' voluntary dismissal of a 2004 action saves its claims as to one of the companies.City of Colton v. American Promotional Events, Inc., No. 09-1864, 40 ELR 20229 (C.D. Cal. Aug. 10, 2010) (Gutierrez, J.).

RCRA, EXEMPTED WASTE:

The Tenth Circuit vacated a lower court decision granting summary judgment in favor of a magnesium company on claims that its handling of waste violated RCRA Subtitle C. The company argued that EPA exempted the five wastes at issue from Subtitle C’s strictures in a prior interpretation of its own regulation and that the Agency cannot change that interpretation without first complying with the notice and comment procedures of the APA. The lower court agreed and entered judgment in its favor. But the only prior EPA interpretation the company can point to is, at best, a tentative one. Because EPA never previously adopted a definitive interpretation, it remained free to change its mind and issue a new interpretation of its own regulations without assuming notice-and-comment obligations.United States v. Magnesium Corp. of America, No. 08-4185, 40 ELR 20223 (10th Cir. Aug. 17, 2010).

OZONE-DEPLETING SUBSTANCES, ALLOWANCES:

The D.C. Circuit remanded an EPA rule that retroactively altered allowances for controlling the production, import, and export of hydrochlorofluorocarbons that had been allowed under prior regulations. A 2003 rule allowed both inter-pollutant and intercompany transfers of allowances, but in the 2010 rule, EPA chose to honor only intercompany transfers of baseline allowances and to disallow permanent baseline changes resulting from inter-pollutant trades. EPA's reasons for refusing to recognize inter-pollutant transfers may shield the Agency's prospective application of the final rule from an arbitrary and capricious challenge, but the rule has an impermissibly retroactive effect. The rule is a successive iteration in a long-running regulatory regime, and EPA's refusal to include inter-pollutant transfers in baseline allowances undoes what the Agency had, in practice, approved under the 2003 rule. The court therefore vacated the rule insofar as it operates retroactively.Arkema Inc. v. Environmental Protection Agency, No. 09-1318, 40 ELR 20232 (D.C. Cir. Aug. 27, 2010).

METHYL TERTIARY BUTYL ETHER, GASOLINE:

A district court held that a research institute must turn over documents relating to its methyl tertiary butyl ether (MTBE) study to one of the plaintiffs in a consolidated multi-district case against several gasoline companies for groundwater contamination stemming from their use of MTBE in gasoline. The institute must produce any raw data from the study, the final report when completed, and any communication between the institute and one of the defendant companies relating to the study. Although the institute indicated that it is willing to produce the study when it is completed, there is no compelling reason that the plaintiff should have to wait four months to receive the raw data. And since it was aware of the litigation when it agreed to do the study, it is not unduly burdensome to require the institute to turn over its communications with the defendant. The institute, however, is not required to turn over any internal communications or internal work product related to the study.In re Methyl Tertiary Butyl Ether Products Liability Litigation, No. 00 Civ. 1898, 40 ELR 20231 (S.D.N.Y. Aug. 19, 2010) (Scheindlin, J.).

CWA, CRIMINAL LAW:

The First Circuit vacated the conviction of a company in San Juan, Puerto Rico, and its owner for violating criminal provisions of the CWA. The lower court erred in excluding the public from the courtroom during jury selection. As such, the conviction must be vacated. But to avoid allegations of double jeopardy at the retrial, the court concluded that the government proved the charges by sufficient evidence to establish the company's and owner's guilt beyond a reasonable doubt.United States v. Agosto-Vega, Nos. 09-1158, -1159, 40 ELR 20222 (1st Cir. Aug. 18, 2010).

EPA promulgated NESHAPs for existing stationary spark ignition reciprocating internal combustion engines that either are located at area sources of hazardous air pollutant emissions or that have a site rating of less than or equal to 500 brake horsepower and are located at major sources of hazardous air pollutant emissions.75 FR 51569(8/20/10).

EPA proposed to update outer continental shelf air regulations for Massachusetts; see above for direct final rule.75 FR 51968(8/24/10).

EPA entered into a proposed consent decree under the CAA that requires the Agency to respond to an administrative petition seeking EPA's objection to a Title V operating permit issued to U.S. Steel Corporation's facility in Granite City, Illinois, by December 17, 2010.75 FR 51267(8/19/10).

EPA entered into a proposed administrative order on consent under CERCLA that requires the settling party to develop a watershed plan, remove tailings from the streamside, perform phytostabilization, revegetate sites, stabilize stream banks, and monitor sinuosity, width, depth, density of microinvertebrates and fishery, upland vegetation cover, stability of stream banks concentration of metals, and habitat trends at the Kerber Creek site near Villa Grove, Colorado.75 FR 51267(8/19/10).

EPA entered into a proposed administrative settlement agreement under CERCLA that requires the settling parties to pay certain U.S. response costs incurred at the Crown Vantage Landfill Superfund site in Alexandria Township, New Jersey.75 FR 52745(8/27/10).

EPA granted a petition submitted by Tokusen USA, Inc., to delist a wastewater treatment plant sludge filter cake generated by its facility in Conway, Arkansas, from the list of hazardous wastes.75 FR 51671(8/23/10).

EPA granted a petition submitted by Occidental Chemical Corp. to delist the wastewater treatment biosludge generated by its facility in Ingleside, Texas, from the list of hazardous wastes.75 FR 51678(8/23/10).

WATER:

EPA identified 12 water bodies and associated pollutants in South Dakota to be added to the 2010 list of impaired waters.75 FR 52735(8/27/10).

EPA announced the availability of its draft document, "Climate Change Vulnerability Assessment: Four Case Studies of Water Utility Practices," for public comment.75 FR 51806(8/23/10).

WILDLIFE:

FWS removed regulations implementing the Fish and Wildlife Conservation Act of 1980; the Act authorized financial and technical assistance to states to design conservation plans and programs to benefit nongame species, but funds never became available to carry out the Act and the FWS does not expect funds to become available in the future.75 FR 51420(8/20/10).

FWS determined endangered status for the Andean flamingo, the Chilean woodstar, and the St. Lucia forest thrush under the ESA.75 FR 50814(8/17/10).

FWS removed the Utah valvata snail from the list of endangered and threatened wildlife because the species is more widespread than thought at the time of listing in 1992.75 FR 52272(8/25/10).

FWS proposed to reintroduce whooping cranes as a nonessential experimental population into habitat in southwestern Louisiana to advance recovery of the species.75 FR 51223(8/19/10).

FWS announced a 12-month finding on a petition to remove the Stephens' kangaroo rat from the list of endangered and threatened wildlife under the ESA; the Agency found that delisting is not warranted.75 FR 51204(8/19/10).

FWS announced a 90-day finding on a petition to list the Brian Head mountainsnail as endangered or threatened under the ESA; the Agency found that listing is not warranted.75 FR 50739(8/17/10).

FWS announced a 90-day finding on a petition to list the Oklahoma grass pink orchid as endangered or threatened under the ESA; the Agency found that listing may be warranted and initiated a status review.75 FR 51969(8/24/10).

NOAA-Fisheries updated the current boundary coordinates in the Gulf of Mexico for areas closed to fishing due to the Deepwater Horizon oil spill.75 FR 50934(8/18/10).

DOJ NOTICES OF SETTLEMENT:

In re Chemtura Corp., No. 09-11233 (Bankr. S.D.N.Y. Aug. 24, 2010). A settling CERCLA defendant responsible for violations at eight Superfund sites must pay $9,119,423 in U.S. response costs incurred at the sites, must provide allowed general unsecured claims totaling $16,928,038, and must continue work at one site in Connecticut.75 FR 52778(8/27/10).

United States v. RP Baking, LLC, No. 2:10-cv-04139-SDW-MCA (D.N.J. Aug. 12, 2010). A settling CAA defendant responsible for violations at a facility in Harrison, New Jersey, must pay a $210,000 civil penalty to the United States and New Jersey and must propose physical changes and/or upgrades to comply with emission limits for volatile organic compounds or face an additional civil penalty.75 FR 52371(8/25/10).

United States v. Repke & Hankins Revocable Trust, No. 5:10-CV-05062-JLV (D.S.D. Aug. 4, 2010). Settling CERCLA defendants, in an action for the recovery of response costs related to the cleanup at the Gilt Edge Mine Superfund site in Lawrence County, South Dakota, must confess to $235,000 and $450,000 judgments, must agree to transfer the site properties they own to the state of South Dakota, and must assign any insurance coverage related to the site to the United States.75 FR 51483(8/20/10).

United States v. Borsch Trust, No. 5:10-CV-05068-JLV (D.S.D. Aug. 11, 2010). Settling CERCLA defendants, in an action for the recovery of response costs related to the cleanup at the Gilt Edge Mine Superfund site in Lawrence County, South Dakota, must confess to entry of judgment in the amount of $890,000, must agree to transfer the site properties they own to the state of South Dakota, and must assign any insurance coverage related to the site to the United States.75 FR 51482(8/20/10).

United States v. Middlesex County Utilities Authority, No. 3:10-cv-04058-MLC-LHG (D.N.J. Aug. 9, 2010). Settling CAA and New Jersey Air Pollution Control Act defendant must pay a $1,330,150 penalty to the United States and New Jersey, must upgrade a landfill gas and collection control system in East Brunswick, New Jersey, and must operate the system in compliance with the CAA and its regulations.75 FR 51843(8/20/10).

United States v. Central Rubber Co., No. 3:10-cv-50193 (N.D. Ill. Aug. 6, 2010). Settling CERCLA defendants responsible for violations at the Parsons Casket Hardware Superfund site in Belvidere, Illinois, must pay $3.6 million in past and future U.S. response costs incurred at the site and must provide access to their properties for remedial action by EPA.75 FR 49947(8/16/10).

United States v. Premix, Inc., No. 1:10-cv-01732-DAP (N.D. Ohio Aug. 6, 2010). A settling CAA defendant that violated emissions limits and recordkeeping and reporting requirements at its facility in North Kingsville, Ohio, must pay a $400,000 civil penalty, must operate an emissions control system that meets and exceeds applicable limits, and must demonstrate compliance by monitoring control parameters.75 FR 49947(8/16/10).

United States v. Conroe Creosoting Co., No. 4:10-cv-02810 (S.D. Tex. Aug. 6, 2010). A settling CERCLA defendant responsible for violations at the Conroe Creosoting Superfund site in Montgomery County, Texas, must pay $200,000 in response costs incurred to both the United States and Texas, must pay the proceeds from the sale of several parcels of land to the United States and Texas, and must pay any proceeds recovered from insurance policies for response costs to the United States and Texas.75 FR 49948(8/16/10).

United States v. City & County of Honolulu, No. 94-00765 DAE-KSC (D. Haw. Aug. 10, 2010). A settling CWA defendant that discharged pollutants from its POTW on Oahu, Hawaii, must pay a $1.6 million civil penalty to the United States and Hawaii, must implement a set of comprehensive injunctive measures in its collection system, and must complete construction of facilities at two wastewater treatment plants to comply with secondary treatment standards of the CWA.75 FR 49949(8/16/10).

United States v. Plains All American Pipeline, L.P., No. 4:10-cv-2833 (S.D. Tex. Aug. 10, 2010). A settling CWA defendant that discharged crude oil into navigable waters of the United States must pay a $3,250,000 civil penalty, must perform injunctive relief on approximately 10,000 miles of crude oil pipeline, and must meet design-capacity and secondary containment requirements for certain breakout tanks.75 FR 49949(8/16/10).

Note: The entries below cover state developments since the last issue of Update. The entries are arranged by state, and within each section, entries are further subdivided by subject matter area. To access material previously reported in 2010, visit our list ofCumulative State Developments. For state material reported prior to 2010, visit theELR Archives.

The Office of Environmental Health Hazard Assessment proposed to amend Cal. Code Regs. tit. 27, §25805, listing S,S,S–tributyl phosphorotrithioate as a chemical known to the state to cause cancer. The comment period ends September 13, 2010. Seehttp://www.oal.ca.gov/res/docs/pdf/notice/33z-2010.pdf(pp. 1268-69).

The Department of Environmental protection proposed to amend Fla. Admin. Code r. 62-550.800, Control of Lead and Copper. Changes would disallow time extensions to conduct public education requirements following a lead action level exceedance for community water systems and non-transient non-community water systems, in addition to changing the minimum number of lead and copper tap samples required. The comment period ends September 3, 2010. Seehttps://www.flrules.org/Gateway/View_notice.asp?id=8976009.

The Department of Health and Environment will hold a public hearing on proposed changes to Kan. Admin. Regs. 28-19-325, regarding compressed air storage. The revised regulations would establish requirements, procedures, and standards for the monitoring of air emissions from compressed air energy storage wells and facilities. The hearing is on October 26, 2010. Seehttp://www.kssos.org/pubs/register%5C2010%5CVol_29_No_34_August_26_2010_p_1271-1294.pdf(p. 1276).

The Department of Environmental Management proposed to amend the Stormwater Design and Installation Standards Manual to implement the Smart Development for a Cleaner Bay Act of 2007. Changes are intended to minimize the impact of stormwater on stream channels, water quality, groundwater, and wetland habitats. There will be a public hearing on September 16, 2010. The Department is proposing to begin requiring compliance with the new manual on January 1, 2011. Seehttp://sos.ri.gov/documents/archives/regdocs/holding/DEM/stormmnl.pdf.

TEXAS

Air:

The Commission on Environmental Quality proposed amendments to 30 Tex. Admin. Code §§115.540 -115.547 and 115.549. Changes would regulate emissions of volatile organic compounds from the cleaning and degassing of marine vessels. The comment period ends September 12, 2010. Seehttp://www.sos.state.tx.us/texreg/pdf/currview/0813is.pdf(pp. 6991-97).

The Indian government rejected plans for a bauxite mine in the eastern Orissa state after a report suggested it would severely impact local ecosystems. The company had said the mine would cause minimal disturbance to the land, which is vital to the economies of two local indigenous tribes. According to Voice of America, the move is being seen as a push by the Indian government to ensure sustainable growth, but the nation plans to welcome a massive coal power plant, expected to be responsible for 26 to 27 million tons of carbon dioxide annually, after the U.S. Ex-Im Bank voted to fund the project on Wednesday. For the full story on the bauxite mine, seehttp://www.voanews.com/english/news/asia/India-Rejects-Mining-Project-to-Protect-Indigenous-Tribal-Land-101650943.html. For the full story on the coal plant, seehttp://www.reuters.com/article/idUS406820485720100827.

BRAZIL INCREASES INVESTMENT IN BIOFUELS

Brazil announced a new set of tax breaks designed to allow small farmers to benefit from biofuel production. The nation began biodiesel production in 2005 and started this year to require that all fossil diesel be sold with at least five percent biodiesel mix, but investment in inefficient and untested crops such as castor bean plants has led to criticism that production incentives only benefit the well-connected. A new tax program gives incentives to large producers of biofuel to buy crops from small farms, in addition to requiring them to instruct small farmers how to improve crop yield. For the full story, seehttp://www.reuters.com/article/idUSTRE67N6GK20100825.

NORWEGIAN PM CALLS FOR GREATER FOCUS ON RENEWABLES

Norway's Prime Minister Jens Stoltenberg said in a speech last Tuesday that the government would like a stronger focus on renewables in the oil and gas industry, fast on the heels of Statoil's pledge to invest five billion crowns in offshore wind in Britain. These follow other developments in a shift in the focus of the Norwegian economy--Norway's state pension fund recently altered a number of its investments to better reflect a commitment to environmental issues, said a global asset manager. In addition to recently selling its shares in BP and blacklisting a Malaysian timber firm that it said participated in environmental destruction in Borneo, the fund has pledged over $30 billion to renewable energy and clean technology through 2013. However, the green group Bellona accused Norway of being a "petroholic" at a controversial stand in the nation's largest oil and gas exhibition, laying out a 12-step "recovery" plan for dependency on resource extraction. The 67 percent state-owned energy company currently spends only a fraction of its $13 billion in expenditures on renewables. For the full story on Statoil and renewable energy, seehttp://af.reuters.com/article/energyOilNews/idAFLDE67N1T220100824. For an analysis on Norwegian energy, seehttp://blogs.reuters.com/environment/2010/08/norway-recovering-petroholic-or-prudent-saver/.